2006_1023_Packet - Laserfiche WebLink

Home

original proposal that resulted in a 29% overall increase which staff negotiated down to a 15.1 % increase before plan design changes. During the renewal process, the Committee members shared the concern that the comprehensive 100% coverage plan had a loss ratio of 102%. This means that the cost of medical services provided to employees in this plan exceeded the premiums being paid which would result in a 41 % increase in premiums. This results when an employee sees no incentive to manage why, when, or where they seek medical attention. Consequently, the healthcare provider will look to recoup these losses through significant premium increases the following year. It is a never-ending spiral. By contrast, when employees are in an 80% coverage plan or a high deductible plan, they now have an incentive to manage their health care usage, and premiums will not escalate so rapidly. This coupled with a health reimbursement account funded with City contributions allows the employee choose in spending while providing incentive to save. Thus, staff recommends that the City still allow the 100% Plan as a choice for those that wish to pay for it, but the City should continue not to fund any City contribution increase to that plan. Employees will have to pay the �u�� cost of the premium increase for the Cadillac 100% plan in 2007 if they want to remain with that plan. Also in order to reduce the cost increase for all plans the committee recommends 3 plan design changes. These include: increasing the co-pay for the 3 tier prescription co-pay to $15130150 for generic/brand/nan-£ormulary; increasing the office visit co-pay on the 100%plan from $20 to $30; and increasing the deductible amounts on the 80/2p plan form $500 to $750 but increasing the contribution amounts to the Health Reimbursement Account (HRA) to help offset the higher deductible and to better protect staff willing to take on more potential risk and to utilize the Cities budgeted dollars by providing a means for staff to move more toward consumer driven in their health care purchases. The City and staff alike has been struggling for a number of years with substantial increases in the cost of providing group health insurance coverage. Staff feels the recommendations will reduce the cost of increases to the health care premiums while offering a way for employees to have sufficient funds to pay the deductible if necessary. The Benefits and Wellness Committee supports the proposed changes noted above. With these proposed changes, Med.ica is willing to provide coverage at an overall cost that is 9.5%higher than what the City is paying in 2006. Citv Contributions �aek�roun�: We have consistently over the years maintained a philosophy of paying 100% of the premium for medical and dental insurance for the single plan. This has also been the trend in the Stanto� 5 group although the marketplace is moving away from paying for 100% coverage plans. Staff recommends following this trend as well as continuing to make small strides toward more equalized contributions. The last several years the City has managed to maintain approximately the same out of pocket costs for the fainilies by absorbing the majority of the increases and by adding the single plus one tier in 2004; those individuals actually saw a decrease in their out of pocket costs. �